Part 1 in a series on the organizational implications of style that permits familiar innovation.
Almost without exception, businesses in the so-called creative industries make products which need to be experienced before they can be evaluated. What this means is that, as the “buyer” or the person commissioning an architectural office to design a new house, I can’t know for sure how much I’ll like that house until you’ve lived and worked in it, often for some time. The same is true about buying a book, a dish in a restaurant, a shirt, an album—until I’ve read the book, eaten the dish, worn the shirt, or listened to the album, I can’t know for sure how much I’ll enjoy it or why.
Economists call these types of products experience goods, to distinguish them from inspection goods whose utility consumers can determine purely by examination. Inspection goods can be either commodities (like bushels of wheat or barrels of crude) or purely functional innovations (like a more reliable mousetrap or a better water purifier).
My working hypothesis: Experience goods are distinguished from inspection goods by having more characteristics that are relevant to the consumer’s perception of their quality, and by participating in more diverse consumer definitions of quality. In other words, experience goods have high dimensionality (inspection goods have low dimensionality), and the quality space for experience goods is heterogeneous (the quality space for inspection goods is homogeneous).
Not all experience goods work in the same way, though buying an experience good for the first time is inevitably a crapshoot. This t-shirt looks, in the photo, like it will fit great. I buy it and, after several washes, it languishes unused in the stack. That t-shirt looks, hanging on the rack, like it won’t fit—but I try it and it sort of feels right. I buy it and, after several washes, it turns out to fit perfectly and wear in the ways I want it to. Soon it is fraying at the edges from being in regular rotation—a sure sign of quality in my book.
Having bought that t-shirt once and experienced it, I am sure of its quality and can now buy the same shirt from the same manufacturer repeatedly—for as long as the cut and production method remains unchanged. The first-time purchase of an experience good lets me make an informed decision about every subsequent purchase of an identical or substantially similar experience good. This, generally, is how I develop favorites for hot sauces, jeans, bagged teas, t-shirts, canned beverages, nutritional supplements, and so on: Buy once to try, buy the same thing again and again if it was pretty good the first time. Familiarity born of experience guides repeat consumption. These kinds of experience goods are traditional products.
This is fine for experience goods where all I want is the same thing over and over again (or, in the case of t-shirts, a crate of 100 of the same shirt). But this isn’t always the case. For some kinds of experience goods, I only want to buy them more than once if what I’m buying again is something new. I am not one of those people who will pay to watch Kill Bill in a cinema for the seventh time but I will pay to be among the first to watch the next movie Quentin Tarantino directs when it comes out (Once Upon a Time in Hollywood 👌). Businesses producing these kinds of experience goods must continually innovate the goods themselves.
But what I’m looking for in these kinds of experience goods is not pure functional novelty. (Or, to be more precise, a low-dimensional functional novelty). In other words, I won’t to pay to see just any new film. What I’ll pay for is something that is simultaneously new to me (in the sense that I haven’t seen it before) and familiar (in the sense that it will feel like the films Quentin Tarantino has made before). The same is true about new albums, new books, new dishes, new clothing from musicians, authors, chefs, and designers whose work I’ve enjoyed before. I’m willing to pay for these (and even pay a premium) before I consume them because my expectation of familiarity makes doing so less of a crapshoot. Experience goods which benefit from novelty are familiar innovations.
Producing traditional products requires a distinctive style which is fully specified and closed-ended, but continually producing familiar innovations requires a distinctive style that is open-ended. Style is remarkably similar to the art historical conception of style, which Meyer Schapiro described as “the constant form—and sometimes the constant elements, qualities, and expression—in the art of an individual or a group,” with the term “constant” used in the sense of both “consistent” and “distinctive.” Style conditions the actual products a business produces and affects how consumers perceive both the products and their producer. But style is not identical with the consumer’s perception of the product or the producer—it is not the same as brand.
When a business has developed an open-ended style that lets it repeatedly produce familiar innovations, it is in a sweet spot. Its customers’ previous experience of its products conditions their consumption of future new products—good previous experiences ensure sales and allow price premiums.
The creative industries highlight the strategic and competitive benefits of having open-ended style because their products are so clearly high-dimensional and their quality definitions so explicitly heterogeneous and subjective. But style is important in any consumer industry where innovation is important—for instance, fast-moving consumer goods and consumer electronics. The example that comes immediately to mind is Apple’s ability (so far) to continually win a price premium for its hardware products because its design team is able to make every new product feel familiar and Apple-y.
The most successful businesses in these industries will have developed and know how to manage open-ended style.
Part 2 of this series explains what knowledge organizations need to implement open-ended style—you can find it here. You can also read more about various conceptualizations of style as commonality in Arthur Kroeber’s Style and Civilizations.